Microeconomics And Economic Theory Samples †MyAssignmenthelp.com

Question: Discuss about the Microeconomics And Economic Theory. Answer: Issues that are Normally Discussed in Microeconomics Microeconomics is a fundamental part of economic theory. Mainly, it focuses on individualeconomic units such as the consumer, the firm, and industry. It tries to explain how a producer, consumer or an industry attains equilibrium while making decisions regarding the allocation of scarce resources. Consumer demand and utility maximization Microeconomicsdiscusses this issue through the consumer demand theory. It tries to explain the relationship between the preferences of consumers in order to achieve an equilibrium that maximizes utility subject to their budget constraints. For instance, consumers seek to maximize their utility from a particular product using their scarce resources. Production The production problem is also a major issue discussed in microeconomics. Therefore, the production theory focuses on the firms decision on the process of converting inputs into outputs According to Harberger, for example, firms are faced with the problem of deciding what to produce, supply, and the quantity to produce. Thus, microeconomics helps firms in reaching an equilibrium price and quantity. Monopoly Market structures Microeconomics also discusses various forms of market structures and their different levels of competition. For example, Pettinger explains how monopoly market structures are considered a microeconomic problem since they create the problem of market failure. Monopolies set exorbitant prices than they would if there was competition and, therefore exploit consumers and create inequality within society. Externalities Microeconomics further discusses the concept of externalities. Pettinger suggests that it is one of the most frequent problems in economics as it has external effects on the people not involved in the activity For instance pollution caused by production factories results in a negative externality to the society. Therefore, Microeconomics mainly discusses issues regarding the decisions of households and firms. In addition, it also focuses on issues such as externalities and market structures. References Harberger, Arnold C. Microeconomics. Econlib, n.d. Web. 14 March 2018. https://www.econlib.org/library/Enc/Microeconomics.html Pettinger, Tevjan. Examples of economic problems, 2016. Economics Help. Web 14 March 2018. https://www.economicshelp.org/blog/15276/economics/examples-of-economic-problems/